6 Tips to Prevent Anti-Competitive Practices

Posted by

Ed Kilner

on 22 Mar 2021

6 Tips for Competition Law Compliance

UK businesses found in breach of competition law face fines of up to 10% of their turnover. We explain how to ensure you stay on the right side of the law.

Business owners understand how best to comply with UK competition law when negotiating contracts. Competition law is there to protect both businesses and consumers. If UK competition law isn’t complied with, The Competition and Markets Authority (CMA) can take legal action against companies and individuals.

If the CMA investigates it could result in a large company fine and, for the company directors, personal consequences including disqualification as a company director under The Company Directors Disqualification Act 1986.

Free Competition Law Training PresentationAccording to the CMA, in the reporting year to the 31 March 2020, 10 company directors were disqualified because of competition law breaches.

‘’The risks of getting caught breaking competition law is increasing. The CMA is toughening its approach to enforcement, with fines on companies accompanied by increased use of powers to obtain the disqualification of directors of the companies involved’’.

Andrea Coscelli, CMA Chief Executive

To help, here are 8 tips to reduce the risks of your business falling foul of competition law.

Staying compliant with competition law

1. Avoid conversations on pricing, strategy, territory & customers

Having a discussion with a rival firm about pricing before negotiating a new contract with a third party can seem like good business planning, until you understand the risks of breaching competition law and the consequences.

By having a chat about prices and forming a cartel or breaking other areas of competition law the business could be fined up to 10% of its annual turnover. If your business trades internationally then it is your worldwide turnover figure that is used to calculate the maximum fine.

In addition, company directors can be disqualified from being a director of a company for up to 15 years and, in cases of cartel activity, individuals could face criminal prosecution. In serious cases this could result in imprisonment for up to 5 years and/or a fine and the confiscation of assets under The Proceeds of Crime Act 2002.

If you happen to be at an event where any of your competitors are present, it's always safest to avoid talking business with rivals.

2. Look out for anti-competitive practices

It is no defence for a company director or a sales person to say that they did not know that what they were doing was wrong and contrary to UK competition law.

Few people in business are competition law experts and it is easy to get sucked into what starts out as a friendly local trade association and ends up as a price fixing cartel, with all the financial and reputational damage consequences for the companies and individuals involved.

3. Size doesn't matter

Competition rules apply to small and big business. It doesn't matter if you don't trade overseas or contract to secure internationally sourced goods.

If you break the law, firms can be fined up to 10% of global turnover, and individuals may be banned or face imprisonment for up to 5 years.

Competition Law E-learning Course

4. Anti-competitive behaviour isn't just price fixing

When you think of the risks involved in falling foul of competition law, most people think of cartels. However, under Chapter II of the Competition Act 1998, you can also be in breach of competition law if you abuse a dominant position in the market place.

A dominant position can arise if you have more than 40% of the market share. Examples of anti-competitive behaviour include undercutting competitors by selling at less than the cost price to drive out competition or tying or bundling purchases so some customers can only purchase an item if they tie in other items that they would prefer not to buy from you.

5. Put anti-competition law training in place

Whether you are a company director, head of sales or procurement or a department head, you need to know enough about competition law to know when something is not right.

That way the business can be alerted and hopefully act to quash any potentially anti-competitive practices that are thought to be money making ideas by over enthusiastic company directors or employees.

It also pays to remember that anti-competition training should not be a one-off. Risk management training should regularly be reviewed and updated so you keep abreast of developments in competition law. That’s because business reputations are hard won but can be easily lost if the company is not committed to complying with competition laws.

6. If you make a mistake, come clean

You may receive leniency and avoid sanctions if you speak up first. Report any concerns you have to the CMA by email: cartelshotline@cma.gov.uk or by phone: 0800 085 1664 or 020 3738 6888. 

Competition Law Training Presentation

Want to learn more about Competition Law?

We regularly publish informative Competition Law blogs. Our Competition Law compliance course will help your employees understand anti-competitive practices, how to avoid them and why to speak up if they see anti-competitive behaviour.

If you require legal advice regarding competition law, get in touch with our contributors Harper James Solicitors.

To help you navigate the compliance landscape we have collated searchable glossaries of key terms and definitions across complex topics including GDPR, Equality, Financial Crime and SMCR. We also regularly report key learnings from recent compliance fines.

You can follow our ongoing YouGov research into compliance issues, attitudes and risk perceptions in the UK workplace through our Compliance Insights blogs.

And if you're looking for a compliance training solution, why not visit our Compliance Essentials Course Library.

Last but not least, we have 70+ free compliance training aids, including assessments, best practice guides, checklists, desk-aids, eBooks, games, handouts, posters, training presentations and even e-learning modules!

If you've any questions or concerns about compliance or e-learning, please get in touch.

We are happy to help!

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